When Seinfeld ended in 1998, Richards returned to stand-up comedy. He incited media furor while performing at the Laugh Factory comedy club in late 2006 after cell phone video was published of him launching into an expletive-laced racial tirade after earlier interruptions from a group of late-arriving audience members.[6] Subsequently due to significant media coverage of the event he announced his retirement from stand-up early in 2007. He appeared as himself in the seventh season of Curb Your Enthusiasm in 2009, acting alongside his fellow cast members for the first time since Seinfeld's finale, as well as lampooning his incident at the Laugh Factory.

Richards got his big TV break in 1979, appearing in Billy Crystal's first cable TV special. In 1980, he began as one of the cast members on ABC'sFridays television show, where Larry David was a writer. This included a famous instance in which guest Andy Kaufman refused to deliver his scripted lines, leading Richards to bring the cue cards on screen to Kaufman, causing him to throw his drink into Richards's face before a small riot ensued (Richards later claimed he was in on the joke).[11] The film Man on the Moon featured a re-enactment of the Andy Kaufman incident in which Richards was portrayed by actor Norm Macdonald (although he is never referred to by name so he could be seen as a composite character taking the place of Richards).[12][13]

In 1989, Richards had a supporting role in "Weird Al" Yankovic's comedy film UHF as janitor Stanley Spadowski. On television, Richards also appeared in Miami Vice (as an unscrupulous bookie), Cheers (as a character trying to collect on an old bet with Sam Malone), and made several guest appearances with Jay Leno as an accident-prone fitness expert.

In 1989, he was cast as Cosmo Kramer in the NBC television series Seinfeld, which was created by fellow Fridays cast member Larry David and comedian Jerry Seinfeld. Although it got off to a slow start, by the mid-1990s, the show had become one of the most popular sitcoms in television history. The series ended its nine-year run in 1998 at #1 in the Nielsen ratings. In the setting of Seinfeld, Kramer is usually referred to by his last name only and is the neighbor of the show's eponymous character. Kramer's first name, Cosmo, was revealed in the sixth-season episode "The Switch".

Richards won more Emmys than any other cast member on Seinfeld. He took home the award for Outstanding Supporting Actor in a Comedy Series in 1993, 1994 and 1997.

Starting in 2004, he and his fellow Seinfeld cast members provided interviews and audio commentaries for the Seinfeld DVDs, but Richards stopped providing audio commentary after Season 5 though he continued to provide interviews.

In 2000, after the end of Seinfeld, Richards began work on a new series for NBC, his first major project since Seinfeld's finale. The Michael Richards Show, for which the actor received co-writer and co-executive producer credits, was originally conceived as a comedy/mystery starring Richards as a bumbling private investigator. However, after the first pilot failed with test audiences, NBC ordered that the show be retooled into a more conventional, office-based sitcom before its premiere. After a few weeks of poor ratings and negative reviews, it was cancelled.

During a performance on November 17, 2006 at the Laugh Factory in West Hollywood, California, Richards shouted a racially charged response to noise from black audience members, shouting "He's a nigger!" several times, and referring to lynching, and the Jim Crow era.[6][15][16][17][18] Kyle Doss, a member of the group Richards addressed, said that the group had arrived in the middle of the performance, explaining:

[H]ere's what happened. As we walked in, we sat down and started ordering drinks. And, as we ordered drinks, I guess we're being a little loud, because there was 20 of us ordering drinks. And he said, "Look at the stupid Mexicans and blacks being loud up there." That's the first thing he said. And then he kept on with his bit. And, then, after a while, I told him, "My friend doesn't think you're funny." And then when I told him that, that's when he flipped me off and said, "F-you N-word." And that's how it all started.

Richards made a public apology when he spoke via satellite on the Late Show with David Letterman, when Jerry Seinfeld was the guest, saying, "For me to be at a comedy club and to flip out and say this crap, I'm deeply, deeply sorry. I'm not a racist, that's what's so insane about this."[20] The audience initially laughed at Richards using the terms "Afromerican" and "Afro Americans" and during uncomfortable pauses in Richards' explanation and apology, unable to decide if the interview was a bit; at one point Seinfeld chided the audience, "Stop laughing, it's not funny." Richards said that he had been trying to defuse heckling by being even more outrageous, but that it had backfired. He later called civil rights leaders Al Sharpton and Jesse Jackson to apologize.[19][21] He also appeared as a guest on Jackson's syndicated radio show.[22] However both Doss and Sharpton have refused to accept Richards' apology, with the former saying "...if he wanted to apologize, he could have contacted somebody to one of us from the group...but he didn't. He apologized on camera just because the tape got out."[21][23]

Richards was married for 18 years to Cathleen Lyons, a family therapist. They have one daughter, Sophia (b. 1975). Richards and Lyons separated in 1992 and officially divorced a year later.[2][3] In 2010, Richards married longtime girlfriend Beth Skipp. They have been together since 2002.